KOUK CHUNG FAI AND ANOTHER v. EBP GLOBAL LTD

HCLA 1/2019

[2020] HKCFI 3070

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

LABOUR TRIBUNAL APPEAL NO 1 OF 2019

(ON APPEAL FROM LABOUR TRIBUNAL CLAIM NO LBTC 1664 OF 2018)

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J U D G M E N T

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I.  INTRODUCTION

1.  The 1^st and 2^nd claimants (“C1” and “C2”, collectively “Cs”) are husband and wife who use to work for the 1^st defendant (“D1”) and/or the 2^nd defendant (“D2”) (collectively, “Ds”).

2.  D2 was a Hong Kong company incorporated in 2006 that provided business consultancy services. Michael Gamper (“M Gamper”) was D2’s sole director, and D2’s sole shareholder was a Belgium entity called ebp management consulting SA/NV (“Belgium Entity”). According to Ds, in/about December 2016, the Belgium Entity was placed into administration as a result of shareholders’ dispute, and D2 effectively ceased operations.

3.  D1 (formerly known as EBP Enterprise Limited, “EBP Enterprise”) was a Hong Kong company incorporated in 2016 by C2 and M Gamper (who were D1’s equal founding members/directors). D1 also provided business consultancy services. In September 2016, EBP Enterprise was renamed ebp Global Limited. In January 2017, C2’s shareholding in D1 was reduced to 29%, and the 2 other shareholders in D1 were M Gamper (57%) and his son Florian Gamper (“F Gamper”) (14%). In May 2018, C2 was removed as a director of D1, but he continued to hold 29% shareholding in the company.

4.  Ds’ claimed:

(a)	that C2 was employed as consultant and then as vice president and general manager of D2, and was for the latter position responsible for D2’s day-to-day management, that C1 was employed by D2 as a senior consultant, and that C1 was the company secretary of both Ds;
(b)	that Cs’ employment with D2 ceased on 30 June 2016, and that they were employed by ebp Management HK Limited (which was a subsidiary of ebp Ventures Limited of which M Gamper and C2 were shareholders) from 1 July 2016 to 31 January 2017;
(c)	Cs commenced employment with D1 on 1 February 2017.

5.  On 6 June 2018, Cs commenced LBTC1664/2018 at the Labour Tribunal (“Tribunal”) against Ds for arrears of wages, end of year payments and life insurance allowances in the sums of $626,822.09 (C1) and $2,212,130.63 (C2).

6.  Ds denied liability save for the life insurance allowance claims which were agreed and awarded at $300 to each of Cs. Thus, Cs’ remaining claims could be summarised as follows:

(a)	C1 claimed against D1 for $544,000 (arrears of wages from 1 September 2017 to 31 July 2018), $50,000 (end of year payment for whole year of 2017) and $29,041.09 (end of year payment for 1 January to 31 July 2018), totalling $623,041.09;
(b)	C2 claimed against Ds jointly and severally for $1,995,500 (arrears of wages from 1 May 2015 to 31 July 2018), $170,000 (end of year payment for the whole year of 2017) and $29,041.09 (end of year payment from 1 January to 31 July 2018), totalling $2,194,541.09.

7.  Ds further alleged Cs wrongfully and in breach of fiduciary duties misappropriated D1’s funds to (a) pay themselves housing allowances to which they were not entitled, (b) pay themselves salary to which they were not entitled, (c) reimburse themselves for inflated and unapproved expenses many of which were unrelated to D1’s business, and (d) make a series of as yet unexplained further payments to their personal joint account.

8.  For the present purpose, it would be sufficient for me to refer to the background summary of Ds’ such allegations in the written submissions by Mr Hughes, counsel for Ds, as follows:

“12.  In around mid-2017, [M Gamper] had cause for concern about D1’s finances and lack of financial transparency regarding payments made to and from D1. [M Gamper] was informed by [C2 and C1] that he, [F Gamper], [C2] and [C1] were owed salary arrears but was unable to obtain clear information from [Cs] as to what was happening with funds paid to D1 and why wages had fallen into arrears when other payments to third parties were still being honoured. [C2] remained responsible for the day to day management of D1 and had control of the company’s bank account, whereas [M Gamper] resided in Belgium.

13.  Additionally, [Cs] were spending a considerable part of their time and efforts on the business of a separate company in which they hold 70% equity (the remaining 30% is held by D1), United Umbrella Limited (‘United Umbrella’). They had co-opted the services of D1’s employee Lincoln Chan to work on the United Umbrella project and appeared to be expensing United Umbrella matters to D1 ……

14.  In order to ensure that costs and expenses were allocated properly, [M Gamper] emailed [Cs] on 8 November 2017 proposing a series of transparency and financial reporting changes. It is Ds’ case that Cs subsequently failed to provide complete financial information in relation to D1 without good reason …… This is strenuously denied by Cs, who lay the blame at [M Gamper’s] door and accuse him of ‘blatant lies’ in this regard ……

15.  On 1 January 2018 C1 commenced employment with another company called Datacrag Limited. D1 alleges that C1’s employment with D1 terminated on 31 December 2017 …… This is disputed by C1 who maintains she remained employed with D1.

16.  In March 2018, [M Gamper] suggested an external auditor be appointed to review D1’s books and accounts, and on 4 May 2018 D1 wrote to Cs by solicitor correspondence demanding that they stop using the D1 bank account.

17.  On 22 May 2018, [C2] was removed from his office as director of D1 by poll vote at an extraordinary general meeting ……”

9.  Such allegations were made with various degrees of particularity in (a) the statement of defence by Ds dated 29 June 2016 (“Defence”) which alluded to inter alia Cs’ misconduct and C2’s breach of fiduciary duties, (b) supplemental statement of M Gamper on behalf of Ds dated 27 July 2018 (“1^st Supp Stmt”),[1] and (c) D1’s counterclaim against Cs filed on 7 December 2018 (“Counterclaim”) that consisted mainly of claims for “misused company funds for operating another company and overpaid payments in the amount of $580,286.91” and “expenses misused or claimed without proper approval and overpayment in the amount of $149,877.87”, totalling $730,164.78.[2] By the Counterclaim, D1 additionally sought loss/damages arising from Cs’ breaches of fiduciary and employment duties in the capacity of director/ employee, and injunctions/orders for delivery up of various items of D1’s company property.[3]

10.  Indeed, as early as the Defence dated 29 June 2016[4] and the 1^st Supp Stmt dated 27 July 2018,[5] Ds already alluded to their intent to file counterclaim in addition to their defence. In the Defence, Ds asserted that as a result of Cs’ misconduct and Cs’ breach of fiduciary duties, they suffered loss of approximately $500,000 and other revenue loss of US$110,000. In paragraph 43 of the 1^st Supp Stmt, D1 said as follows: “[D1] reserves its right to set-off any such unauthorised payments against any amounts owing to [Cs] and to counterclaim for all such unauthorized payments once a full investigation has been undertaken.”

11.  According to the 2^nd supplemental statement of M Gamper dated 3 August 2018 (“2^nd Supp Stmt”), D2 on 31 July 2018 sent letters to Cs entitled “Termination of Employment”, which stated inter alia as follows: “Without prejudice to [D1’s] position as stated in [LBTC1664/2018] and in case the Tribunal or Court determines that you continue to be employed as at today’s date then for the avoidance of doubt, this letter serves as formal written notice that your employment with [D1] is terminated effective today without notice or payment in lieu in accordance with section 9 of the Employment Ordinance (Cap 57)”. By such letters, Cs were also instructed to return all company property and documents to D1 by 2 August 2018.

12.  By letter dated 3 August 2018, Ds informed the court that D1 intended to file a counterclaim against Cs on the matters in paragraphs 40-45 of the 1^st Supp Stmt by 10 August 2018 (“3/8/18 Letter”). But as Mr Wong, counsel for Cs, pointed out, 10 August 2018 came and went without either D1 or D2 filing any counterclaim.

13.  On 7 December 2018, D1’s Counterclaim was filed with an annexed statement and supporting documents (“Dec Documents”) but without any schedule of calculations/particulars as to how the Dec Documents corresponded to various sums stated in the Counterclaim.

14.  In paragraph 43 of the Counterclaim, Ds requested the Tribunal to decline jurisdiction and transfer Cs’ claims and D1’s Counterclaim in LBTC1664/2018 to the District Court (“DCt”). On 22 January 2019, Ds submitted a 3^rd supplemental statement of M Gamper on behalf of Ds (“3^rd Supp Stmt”), which again requested the Tribunal to transfer LBTC1664/2018 to the DCt (“Last Transfer Application”).

15.  On 29 January 2019, Deputy Presiding Officer Jo Siu (“DPO”) refused the Last Transfer Application (“Refusal Order”), and granted an order as follows (“Order”):

“1.  [Ds’] transfer application be refused.

2.  Leave for [Cs] to file and serve further evidence and serve a copy on [Ds] on or before 30^th day of January 2019, 09:00am.

3.  Trial be adjourned to 30^th day of January 2019 at 9:30am at Court 10 for part heard. Parties shall bring along all their witness statements and original documents to attend.

4.  Costs be reserved with costs of today’s hearing in relation to [Ds’] transfer application be to [Cs] in any event (15 minutes).”

16.  On 29 January 2019, the DPO gave oral decision for the Refusal Order. On 10 April 2019, the DPO handed down written Reasons for Decision (“Reasons”).

II.  PROCEDURAL HISTORY CONCERNING REFUSAL ORDER

17.  Since the Order referred to the trial of Cs’ claims in LBTC1664/2018 having commenced on 28 January 2019 and adjourned part-heard on the following day, it would be useful to set out the procedural history of such proceedings concerning the Refusal Order in context, which had been helpfully summarised by the DPO in paragraphs 7-22 of the Reasons.

18.  As alluded to in paragraph 9 above, Ds filed their Defence on 29 June 2018. At the call-over hearing on 4 July 2018, the parties were directed to file/serve witness statements and supporting documents on/before 18 July 2018. At the 1^st mention hearing on 20 July 2018, Ds failed to file any witness statements or supporting documents as directed, but instead sought extension of time to comply with the order made at the call-over hearing, and on the basis of an intended counterclaim applied for the 1^st time to transfer the case. The deputy presiding officer considered such application premature, and adjourned it to a 2^nd mention hearing pending further documents and submissions.

19.  On 27 July 2018, Ds filed the 1^st Supp Stmt which reserved D1’s right of set-off and to counterclaim for Cs’ breach of fiduciary duties as director and/or duties as employee. By the 3/8/18 Letter, Ds for the 2^nd time requested the Tribunal to decline jurisdiction and to transfer LBTC1664/2018 to the Court of First Instance (“CFI”) pursuant to section 10 of the Labour Tribunal Ordinance Cap 25 (“LTO”). By a letter dated 7 September 2018 to the Tribunal, Ds applied for an adjournment of 6 weeks to investigate into the accounting records, but contrary to previous indication, Ds suggested readiness to file a counterclaim only by 3 October 2018. Ds also for the 3^rd time maintained their transfer application, but to the DCt given the then imminent increase of the jurisdiction of the DCt to deal with claims up to $3,000,000.

20.  At the 2^nd mention hearing on 10 September 2018, D1 still had not filed any counterclaim or any supporting documents. At such hearing, Ds applied for the 4^th time to the deputy presiding officer for transfer of LBTC1664/2018 to the DCt, but such application was dismissed whereupon Cs/Ds confirmed they did not need to file further statements, so the deputy presiding officer set down LBTC1664/2018 for trial on 25 and 28-30 January 2019.

21.  On 7 December 2018, which was almost 5 months after the first intimation of an intention to file a counterclaim and more than 2 months after 3 October 2018, Ds finally filed D1’s Counterclaim, which in paragraph 43 therein requested the Tribunal to decline jurisdiction and to transfer LBTC1664/2018 to the DCt.

22.  Then on 22 January 2019 (ie 3 days before the scheduled trial), Ds submitted the 3^rd Supp Stmt with another bundle of documents (“Jan Documents”). The DPO noted the 3^rd Supp Stmt raised new matters as well as uncertainty as to whether D2 also raised counterclaim against Cs, but it also narrowed down the reliefs sought under the Counterclaim. Anyway, the 3^rd Supp Stmt for the 5^th time made the Last Transfer Application to transfer LBTC1664/2018 to the DCt.

23.  For the present purpose, it would be sufficient for me to refer to the brief summary of the 3^rd Supp Stmt in the written submissions by Mr Hughes:

“22.  …… In the [3^rd Supp Stmt, M Gamper] referred to an internal review having been undertaken after bank statements for D1 and D2 were obtained, as a result of which:

(1)  D1 discovered that Cs had arranged for payments to be made from D1’s bank account to their joint bank account in the period from February 2017 until 3 July 2018 in the sum of HK$1,183,000, which appeared to be for salary payments ……;

(2)  D2 discovered that payments which appeared to relate to salary or bonus payments were made to Cs’ joint bank account in the period from August 2015 until 2 March 2017 in the sum of HK$1,910,874.23 ……;

(3)  D1 and D2 discovered that Cs had also made a number of unauthorised payments to themselves for car parking fees, unauthorised expenses and unauthorised withdrawals ……;

(4)  D1 believes it has paid all salaries and amounts due to C1 and C2 during their respective period of employment with D1 and that C1 and C2 owe D1 for amounts overpaid to which they were not entitled ……;

(5)  D2 maintains it has paid all wages and amounts due to C2 in relation to his employment with D2 for the period he was employed (ie up to 30 June 2016) and no sum is outstanding ……”

24.  The trial in LBTC1664/2018 commenced on 28 January 2019. On the very day of commencement of the trial, Ds filed a document titled “LBTC1664/2018 – Table of payments made by [Ds] to [Cs] which appear to be salary in relation to [Cs’] claims prepared by [Ds] (pursuant to the direction by [DPO] on 28.01.2019” (“Ds’ Table”).

25.  For convenience, I set out below the DPO’s record in the Reasons as to what happened at the trial:

“19.  The trial of the case commenced on 28 January 2019 (instead of 25 January 2019) due to exceptional urgent circumstances of this Tribunal. Before the parties started giving evidence, on the 1^st and 2^nd day of the trial, [DPO] has spent some time with the parties to deal with the quantum issue and some other preliminary matters. On the 2^nd day of the trial ie 29 January 2019, [DPO] has raised a concern that [DPO] appears do not have jurisdiction to deal with the [Counterclaim]. Accordingly, [DPO] and the parties re-visited the Dec and Jan Documents and the [DPO] indicated to parties, which at that juncture they also accepted, not to spend extensive time on matters that fall outside the jurisdiction of the [Tribunal]. Notwithstanding the aforesaid, [DPO] allowed the parties to file all documents they have submitted, irrespective the documents may relate to matters that fall outside the jurisdiction of the [Tribunal].

20.  After settling all the preliminary issues, on about the 2^nd day of the trial ie 29 January 2019, [DPO] enquired, as repeated in their Dec and Jan Documents, if Ds still intended to apply to transfer the case to [DCt] under s 10 of the LTO and Ds answered in the affirmative (‘the 2^nd Application’) [Last Transfer Application]. Ds basically reiterated the reasons they put forth in their statements eg the [Counterclaim] involves complicated facts and law etc. Cs objected the 2^nd Application [Last Transfer Application], essentially repeating the grounds of opposition as set out in their statements eg their claims are straightforward, they had a valid employment contract etc…

21.  After considering the parties’ verbal submissions and also taken into account the parties’ written submissions advanced in their respective statements filed with this Tribunal, [DPO] dismissed the 2^nd Application [Last Transfer Application] verbally [Refusal Order] and the detailed reasons are set out below [Reasons].

22.  After dealing with the 2^nd Application, Cs started giving evidence. This Tribunal has heard Cs’ case on 29 January (half day) and 30 January 2019. As Cs have yet completed their evidence by 30 January 2019, further having considered the Jan Documents were filed by Ds at a very late stage being just before the trial, parties were given opportunity to submit further evidence and to call additional witnesses relating to Cs’ claim. In the result, the case was adjourned to be part heard for another four days on 12-14 and 17 June 2019. There is no stay application.”

26.  There was no stay of the proceedings or suspension of the trial in LBTC1664/2018 notwithstanding the Leave Application referred to in paragraph 34 below.

27.  On 8 February 2019, Cs wrote to the DPO to seek leave to call Winnie Yan, D1’s accountant for the past 2 years, as Cs’ witness at the part-heard trial in June 2019. On 29 March 2019, Cs submitted their supplementary statement and a table that listed emails, accounts payable / expenses files, correspondence and accounting journals (with attached documents) in response to Ds’ Table, and also Winnie Yan’s witness statement (“Cs’ Further Evidence”).

28.  Although Ds were required to submit their further evidence on/before 29 April 2019, they only did so on 5 June 2019 (ie a few days before the adjourned hearing of the part-heard trial of LBTC1664/2018). Such further evidence included Ds’ supplementary statement and various documents (“Ds’ Further Evidence”).

29.  On 10 June 2019, Cs wrote to the DPO to complain about the lateness of Ds’ Further Evidence. The scheduled part-heard trial dates on 12-14 and 17 June 2019 were vacated, and re-fixed to 23-24 and 26-27 September 2019. On 5 September 2019, pending the outcome of the Leave Application, the trial in LBTC1664/2018 was adjourned sine die with liberty to restore.

III.  DPO’s REASONS FOR DECISION

30.  As seen above, the DPO made the Refusal Order in respect of the Last Transfer Application. The DPO recognised the Tribunal has a wide and unfettered discretion under section 10 of the LTO whether or not to decline jurisdiction. The DPO held that Cs’ claims fell within the Tribunal’s jurisdiction, so the Tribunal was entitled to hear such claims. It was said Cs’ claims were straightforward and did not involve any complex issues of fact and/or law, so it would be in line with the CJR underlying objectives (ie being more cost and time effective) to deal with Cs’ claims at the Tribunal.[6]

31.  The DPO noted “that by filing the CC [ie the Counterclaim], it is self-evident that Ds are not merely raising a set-off but also to seek to recover overpayments allegedly made to Cs due to their misappropriation or mishandling of company resources”.[7] The DPO took the view that certain heads of claim under D1’s Counterclaim fell outside the Tribunal’s jurisdiction to which Ds agreed (see paragraph 35 below), and the DPO “declined jurisdiction to adjudicate the CC claims [ie the Counterclaim] as founded in tort and other areas of law”.[8]

32.  The DPO further noted D1 had not commenced any claim in the DCt on the basis of the subject matter of the Counterclaim, so there was no parallel litigation against Cs in any other courts in Hong Kong even though before D1 filed the Counterclaim, Ds in their statements repeatedly urged for LTBC1664/2018 to be transferred and tried in the DCt.

33.  The DPO then went on to say as follows:

“64.  More importantly, whilst theoretically there could be a possibility of two sets of proceedings carrying on in parallel if Ds will file a claim in the [DCt] based on the [Counterclaim], it is however considered the issues and the relevant facts of Cs’ claims and the [Counterclaim] claims are not in common. As stated above, Cs’ claims are about wages arrears and some other alleged entitlements based on their Contracts and other employment documents, whereas the [Counterclaim] claims concern with recovering expenses and payments that Ds said Cs have been wrongfully overpaid, essentially based upon some bank statements and receipts. Hence, the facts where Cs’ claims rely upon are independent of the facts that the [Counterclaim] claims are based upon …… Accordingly, it is considered the chance of having an undesirable situation arising from the same set of factual evidence in two jurisdictions and the risk of having two inconsistent judgments is relatively low insofar as Cs’ claims and the [Counterclaim] claims are concerned.

65.  Further, even if Ds do subsequently file a claim in the [DCt] and it is considered there could be a risk of having two inconsistent judgments with common issues and facts being tried in two different courts, subject to court’s approval, there is nothing to bar Cs and Ds to agree transferring the entire case to another court if they consider appropriate.”

IV.  APPLICATION FOR LEAVE TO APPEAL

34.  On 19 February 2019, Ds filed an ex parte Application for Leave to Appeal on Point of Law against the Refusal Order (“Leave Application”). For the Leave Application, Ds relied on paragraphs 1(a)-(e) and 2(a)-(e) of the draft grounds of appeal as annexed to the Leave Application (“Draft Grounds”).

35.  The Leave Application came for hearing before this court on 25 April 2019. Mr Hughes summarised Ds’ case for transfer and appeal against the Refusal Order as follows:

“(1)  Commonality and duplicity. [LBTC1664/2018] give rise to viable mixed claims against Cs for inter alia breach of fiduciary duties and for injunctive relief that falls outside the Tribunal’s jurisdiction. Ds are at liberty to and will issue proceedings in the [DCt], at which point common issues of fact will be determined by it and the Tribunal which will risk inconsistent judgments.

(2)  Complexity and gravity. Voluminous documents have been filed in support of such accusations and in reply to Ds’ fiduciary claims. There is complexity. The parties accuse each other of professional impropriety, dishonesty and perjury likely to damage their reputations. The claims are unsuitable for informal and speedy determination, and representation and adversarial process is in the parties’ best interests.”

36.  At the hearing of the Leave Application, Mr Hughes did not rely on paragraphs 2(a)-(b) of the Draft Grounds, but relied on the following 4 grounds of appeal:

(a)	misdirection of law regarding commonality in the Reasons (see paragraphs 1(c), 2(c) and 2(e) of the Draft Grounds);
(b)	misdirection of law regarding complexity (and consequent need for formal and adversarial process) (see paragraphs 1(a), (b), (d) and (e) of the Draft Grounds);
(c)	misdirection of law and failure to make relevant considerations re cost- and time-effectiveness under the CJR (see paragraphs 1(e) and 2(d) of the Draft Grounds);
(d)	failure to consider gravity of the allegations (and consequent need for formal and adversarial process).

37.  On 25 September 2019, this court handed down written decision for the Leave Application (“Leave Decision”), and granted leave for Ds to appeal against the Refusal Order (“Leave Order”) on the basis of the Draft Grounds (except for the preamble and paragraphs 2(a)-(c) thereof) (“Permitted Grounds”).

V.  DCCJ2090/2019

38.  On the day following the hearing of the Leave Application, ie 26 April 2019, D1 commenced DCCJ2090/2019 against Cs as defendants. The Statement of Claim (“SOC”) endorsed on the Writ of Summons largely mirrored the Counterclaim. I note both the SOC and the Counterclaim were made by D1 only and not by Ds. For present purpose, it is sufficient for me to refer to Mr Wong’s useful summary of DCCJ2090/2019 as follows:

D1’s claim	Counterclaim §	SOC §
Wrongful monthly payments made by D1 to Cs’ landlord for car parking rental	39(ii)	33(b)
C1’s expenses not approved and should not have been reimbursed	39(iii)(a)	33(c)(i)
C2’s expenses not approved and/or should not have been reimbursed because they did not relate to D1’s business	39(iii)(b)(A), (c), (d)	33(c)(ii)(A), (iii), (iv)
C2’s over-reimbursement	39(iii)(b)(B) (HK$73,011.01)	33(c)(ii)(B) (HK$53,655.68)
Excess payment transferred to Cs’ joint bank account without D1’s authority	40	33(d)
Counterclaim for unliquidated damages	42(a)	45(e), prayer of relief 2(e), (3)
Delivery up of D1’s properties (in substantially the same terms)	42(b)	30

39.  Mr Wong informed this court that DCCJ2090/2019 had just reached the stage of closure of pleadings.

VI.  APPEAL

40.  Pursuant to the Leave Order, on 18 October 2019 Ds filed the Notice of Originating Motion to appeal against the Refusal Order (“Appeal”) on the following refinement of the Permitted Grounds:

(a)	In granting the Refusal Order, the DPO erred in law by failing to discharge her statutory duty to investigate by failing to inquire whether Ds would rely on any defence of set-off which would arguably give rise to an order for transfer. In the absence of any order for transfer, the DPO would arguably have to hear and adjudicate on the defence of set-off (based on the same subject matters of the Counterclaim including legal issues, factual allegations and volume of documents) before her determination of Cs’ claims. The defence of set-off with presently quantified aspects of over $700,000 could not be said to be insignificant when viewed against the quantum of Cs’ claims (“Ground 1”).
(b)	In declining jurisdiction over D1’s Counterclaim and considering D1’s claims against Cs under the Counterclaim should be litigated in another court with jurisdiction over the entirety of such Counterclaim, the DPO erred in law by failing to take into account the extent or scope of the defence of set-off which arguably would require the Tribunal in adjudicating Cs’ claims to canvass the same factual evidence and legal issues as for the Counterclaim which must be pursued in another court as the DPO had declined jurisdiction (“Ground 2”).
(c)	In declining jurisdiction over the entirety of the Counterclaim including heads of claim which were within the jurisdiction of the Tribunal but at the same time refusing to transfer the proceedings including the Counterclaim to the DCt, the Tribunal erred in law by failing to take into account or failing to sufficiently take into account the consequent injustice to Ds of not being able to pursue some of the claims under the Counterclaim either at the Tribunal or (in the absence of a transfer order) in other courts (“Ground 3”).
(d)	The DPO failed to give due regard/weight to the complexity and gravity of the factual and legal issues in dispute as well as the gravity of the allegations:
	(i)	During the trial the DPO and the parties revisited the Dec Documents and the Jan Documents, and the DPO indicated to the parties not to spend extensive time on matters that fall outside the jurisdiction of the Tribunal. Notwithstanding the aforesaid, the DPO allowed the parties to rely upon at the trial all documents they had submitted, irrespective of whether the documents might relate to matters that fall outside the jurisdiction of the Tribunal. In light of the Jan Documents, directions were also given for the parties to submit further evidence and to call additional witnesses relating to Cs’ claims, irrespective of whether such additional evidence might relate to matters that fall outside the jurisdiction of the Tribunal (“Sub-4a”).
	(ii)	By imposing case management measure to deal with additional documents/information for the purpose of Cs’ claims and instructing the parties not “spend extensive time on matters that fall outside the jurisdiction of the [Tribunal]”, the DPO discounted their complexity and gravity by viewing them through the prism of Cs’ claims without taking into account Ds’ defence of set-off (“Sub-4b”).
	(collectively, “Ground 4”).
(e)	The DPO failed to take into account or sufficiently take into account the connection and commonality between Cs’ claims and Ds’ defence and D1’s Counterclaim (“Ground 5”).

41.  Ds asked for (a) the Appeal to be allowed, (b) the Refusal Order to be set aside, (c) Cs’ claims and D1’s Counterclaim in LBTC1664/2018 be transferred to the DCt for consolidation with DCCJ2090/2019, and (d) costs of and incidental to the Appeal to be paid by Cs.

42.  On 5 November 2019, Cs’ solicitors filed Notice to Act in respect of the Appeal. On the same day, the hearing of the Appeal was fixed to be heard by this court on 25 February 2020. Due to public health considerations, such hearing was generally adjourned. On 9 March 2020, this court directed that the hearing of the Appeal be re-fixed in consultation with counsel’s diaries. On 5 June 2020, the hearing of the Appeal was re-fixed to be heard by this court on 3 November 2020 (“Hearing”).

43.  At the Hearing, Mr Hughes abandoned reliance on Grounds 1-3 and 5, and confirmed that for the Appeal Ds would only rely on Ground 4 which Mr Hughes submitted was essentially that the DPO erred in law by failing to discharge her duty to investigate which gave rise to injustice in that a fair and proper determination of Cs’ claims could not be maintained because she failed to give regard / due weight to the complexity and gravity of Cs’ claims. But as seen in paragraph 68 below, Mr Wong had a different reading of Ground 4.

VII.  LEGAL PRINCIPLES

44.  Appeal  A party’s right to appeal against an award, order or determination by the Tribunal is limited to questions involving points of law or excess of jurisdiction.[9] On such appeal, the CFI may allow the appeal, dismiss the appeal or remit the matter to the Tribunal with directions.[10] Specifically, the CFI may draw any inference of fact, but may not (a) reverse or vary any determination made by the Tribunal on questions of fact or (b) receive further evidence.[11]

45.  As explained by Godfrey Lam J in Chok Kin Ming v Equal Opportunities Commission,[12] these provisions should be construed in light of the statutory scheme as a whole. The learned judge referred to the guidance by Godfrey JA in Lee Tim v Chow Suk Ching (t/a Wang Chong Co)[13] as follows:

“Section 7 of the [LTO] provides the background to the exercise by the High Court of the jurisdiction conferred on it by ss.32 and 35 of the [LTO]. It is obvious from s.7 that the legislature intended to ensure, no doubt in the interests of economy, speed and finality, that the [Tribunal] should have a plenitude of jurisdiction over claims such as those made here. And it is equally obvious, from ss.32 and 35, that the legislature intended severely to circumscribe the powers of the High Court to interfere with a decision of the [Tribunal]. The High Court may not reverse or vary any determination made by the [Tribunal] on questions of fact (although it may draw any inference of fact, which must, I suppose, mean any inference consistent, but not at variance, with the [Tribunal’s] findings of primary fact).”

Godfrey Lam J added it “may be that, as Godfrey JA suggested in Lee Tim, the court may draw an inference of fact consistent, but not at variance, with the [Tribunal’s] findings of primary fact. Before the court draws any such inference, however, it has to be satisfied that the relevant evidential basis is complete”.

46.  Further, Order 55 rule 7(7) of the Rules of the High Court Cap 4A provides that the CFI shall not be bound to allow the appeal on the ground merely of misdirection, or of the improper admission or rejection of evidence, unless in the opinion of the court substantial wrong or miscarriage has been thereby occasioned.

47.  Duty to investigate  The Tribunal has the statutory duty to investigate, and failure to discharge such duty such that it gives rise to injustice in that a fair and proper determination of the claim cannot be attained is a viable ground of appeal.[14] I adopt the relevant principles discussed in paragraphs 17-21 of my judgment in Vermeerbergen Peter Alfred v Swisstribe Ltd,[15] but will not repeat them here.

48.  Claim within Tribunal’s jurisdiction  As to what claims fall within the exclusive jurisdiction of the Tribunal, Au-Yeung J in Woo Kwok Ping v the Incorporated Management Committee of Tsuen Wan Trade Association Primary School (No 2) summarised the relevant legal principles as follows:[16]

“17.  The [Tribunal] has exclusive jurisdiction over a claim for a sum of money, whether liquidated or unliquidated arising from, amongst others, (a) the breach of a term of a contract of employment, and (b) the failure to comply with the provisions of the Employment Ordinance.

18.  Notwithstanding that, any claim in respect of a cause of action founded in tort, whether arising from a breach of contract or a breach of a duty imposed by a rule of common law or by any enactment falls outside the [Tribunal’s] jurisdiction: [LTO] ss.7(1)-(2); paras.1 and 3 to the Schedule.

19.  In deciding the jurisdiction issue, the Court should look at both the pleaded causes of action and relief sought.

20.  Mixed claims founded both in employment contracts and torts are excluded from the [Tribunal]: Uferahal Limited v Hansen Larry Douglas [2015] 2 HKLRD 683 at [20], Au-Yeung J.

21.  Similarly, a mixed claim for monetary and non-monetary relief, even though based on breach of contract or of the Employment Ordinance, fall outside the jurisdiction of the [Tribunal]: Gain Hill (Hong Kong) Ltd v Li Kin Yip [2006] 4 HKLRD 186 at [27]-[28], Sakhrani J.

22.  The proper approach of the Court is to look at the substance of the dispute and not the labels put on the pleadings. The Court should assess whether the other claims brought by the plaintiff are merely for ‘window dressing’, such that the real claim left is one that falls within the [Tribunal’s] exclusive jurisdiction: Ho Chee Sing James v Secretary for Justice [2015] 4 HKLRD 311 at [32]-[34], DHCJ Saunders.

23.  A distinction should be drawn between jurisdiction and forum for trial. Whether a claim falls within the jurisdiction of the [Tribunal] is determined at the time the claim is filed.  On the other hand, the forum for trial is determined at the time the issues are crystallised or when there are changes in circumstances after filing of the writ.”

49.  In Woo Kwok Ping, the application under consideration was whether proceedings commenced by the employee in the CFI for wrongful dismissal ought to be struck out for want of jurisdiction, hence the learned judge referred to viewing the substance of the dispute via the pleaded causes of action and the relief sought. Recently, in Lee Yiu Hong v Well-in Hotel Supplies Company Limited, I discussed the relevant principles for considering whether any claim in the Tribunal falls within or outside the ambit of its exclusion jurisdiction.[17] I adopt such principles, which are consistent with those set out by Au-Yeung J in Woo Kwok Ping, but do not repeat them here.

50.  Further, an employee’s claims for arrears of wages, allowances and end of year payments are clearly within the exclusive jurisdiction of the Tribunal, and an employer’s claims for overpayment of wages and other sums, allowances and/or expenses are outside the Tribunal’s jurisdiction. According to To J in Secretary for Justice v Lee Kam Chi Angus,[18]

“4. [LTO的附表第1(a) 段]賦予[Tribunal]司法管轄權審理違反僱傭合約條款的申索。按照字面的詮釋，僱員追討僱主欠付的工資或津貼是一項違反僱傭合約的條款的申索，屬於該附表所賦予的司法管轄權範圍以内。但僱主討回多付的工資或津貼，並不是一項違反僱傭合約的條款的申索，屬於該附表所賦予的司法管轄權範圍以外。所以，[Tribunal]對該類申索沒有司法管轄權。…… 雖然被告人在該申索的抗辯理由是基於他的僱傭合約條款，附表所列的司法管轄權限不能函蓋至違反僱傭合約條款以外的申索。由於該申索是追討多付的津貼，而不是有關違反僱傭合約條款的申索，反而[Tribunal] …… 對該申索卻沒有司法管轄權。”

51.  Defence of set-off  Section 32(1) of the Employment Ordinance Cap 57 (“EO”) provides that “[no] deductions shall be made by an employer from the wages of his employee or from any other sum due to the employee otherwise than in accordance with this Ordinance”. Mr Hughes agreed with the legal propositions set out in paragraphs 20-28 of Mr Wong’s written submissions, which I gratefully adopt as follows:

“20.  Firstly, …… EO section 32(1) imposes a general prohibition on an employer from deducting, in any way, from the wages of his employee or from any other sum due to the employee otherwise than in accordance with the EO. The recent Court of Appeal’s decision in Xu Yi Jun v GF Capital (Hong Kong) Ltd [2020] HKCA 663 ……, which is pertinent to the instant appeal and is indeed binding authority, unequivocally held (at §59) that ‘section 32(1) clearly does not permit the defendant [employer] to exercise an equitable set-off by raising a claim for unliquidated damages against its liability to pay the’ wages of its employee or from any other sum due to the employee, …… this authority …… is examined in detail in the rest of this Part.

21.  In Xu Yi Jun, the plaintiff ex-employee sought summary judgment against the defendant ex-employer for HK$7,800,000, being her guaranteed bonus under her employment contract (‘Bonus’), which the defendant failed to pay her [para 2]. …… By its counterclaim, the defendant averred that the plaintiff was in breach of express contractual duties, implied common law duties of fidelity and to exercise reasonable care and skill, and the duty of care as an employee, and that it had thereby suffered loss and damage substantially exceeding the amount of her claim [para 20]. Consequently, …… the defendant sought to exercise an equitable set-off against its liability to pay the Bonus [para 43].

22.  The Court of Appeal (Kwan VP delivering its only reasoned Judgment) held (at §59) that ‘the wording of section 32(1) clearly does not permit the defendant to exercise an equitable set-off by raising a claim for unliquidated damages against its liability to pay the Bonus. The courts below were in error in holding that there is an arguable defence of equitable set-off’. The Court’s reasons for so holding is, in summary, fourfold.

23.  Firstly and as a preliminary point, the Court accepted (at §47) that, although ‘section 32 of the EO is in Part VI which has the heading ‘Deductions from Wages’ and the section itself is headed ‘Restriction on deductions from wages’, and section 32(2), which lists out the deductions that may be made by an employer in subsections (a) to (i), is governed by the opening words ‘The following deductions may be made by an employer from the wages of his employee’, ‘effect must be given to the words ‘or from any other sum due to the employee’ in section 32(1) and that the wording is sufficiently wide to cover an end of year payment such as the Bonus.’ ……

24.  Second, 19^th century English legislation (viz. the Truck Acts in 1831 and 1896), which set the historical context for the Hong Kong legislation, was considered: §49. The pertinent English (and Australian – similar legislation existed in Western Australia) authorities were then surveyed (at §§50 – 51, 54, 56):

(a)  ‘In Williams v North’s Navigation Collieries (1889) Ltd [1906] AC 136, the House of Lords held that the Truck Act 1831 does not allow an employer when paying wages to a workman to make any deductions except those expressly sanctioned by the Act. The obligation to pay the entire amount of wages in section 3 does not allow the employer to pay only the balance after deducting a cross-claim for which a court of summary jurisdiction had ordered the workman to pay to the employer in respect of breaches of contract to work. Reference was made to section 23 of the Act which made elaborate provision with safeguards of the cases in which debts due from the workman may be deducted from the wages due. These provisions would be wholly unnecessary if an employer were already authorised by section 3 to deduct anything that the workman owed him and to pay merely the balance (at 140).’ Further, the Law Lords’ ‘speeches do not provide support for the distinction… between an ‘in-litigation’ set-off and one that is outside litigation.’

(b)  ‘So for many years it has been the legislative policy in England to provide protection for a certain class of employees by declining to allow set-offs against salary (Sim v Rotherham Metropolitan Council [1987] Ch 216 at 259H).’

(c)  ‘In… Western Australia… it was held that the statutory provision would strike down a contractual provision permitting the withholding of wages by the employer and the employer was not entitled to make a deduction from wages on the basis of an equitable set-off (Conti Sheffield Real Estate v Brailey (1992) 48 IR 1 at 6 to 7).’

(d)  ‘As stated by Nicholls LJ in Delaney v Staples [1991] 2 QB 47 at 57F to G, ‘deduction’ occupies a key place in the legislative scheme (under comparable English legislation being the Wages Act 1986 which replaced the Truck Acts), so the omission to define ‘deduction’ could not have been an oversight. The legislature must have intended that the word should not have a ‘carefully circumscribed meaning’ and if that is so, that word is intended to have ‘an extended rather than a confined area of application’.’

25.  Thirdly, on this basis, the Court of Appeal concluded (at §54) that ‘[t]he same reasoning should apply in interpreting the word ‘deductions’ in section 32(1). The legislature could not have intended to remove the protection against set-off and permit the employer to deprive the employee temporarily of the right to payment of a sum due to him until the final resolution of the employer’s claim for unliquidated damages against the employee for bad or negligent work.’

26.  Fourth, the Court distinguished (at §57) an equitable set-off from ‘a set-off by judgment, where cross-liabilities were netted off and extinguished to the extent of the other pursuant to a judgment, according to a long standing practice of the courts as part of their inherent jurisdiction over their own proceedings to allow cross-judgments given in the same action, or in different actions, to be set off against each other…. That was also the situation in Scout Association of Hong Kong v Li Tak Wai [2018] 1 HKLRD 690, where the Court of Appeal upheld the judgment below allowing cross-liabilities adjudged to be due to be set off against each other, see in particular §33. That the practice of set-off by judgment is permissible does not support the defendant’s contention that section 32(1) does not preclude an employer from exercising an equitable set-off in an action by raising a claim for unliquidated damages.’

27. Hence, Xu Yi Jun is unequivocal and binding authority …… that section 32(1) plainly prohibits [employers] from purporting to exercise any set-off by raising the Counterclaim against their liability to pay [employees] their arrears of wages and end of year payments, …… To the extent it is inconsistent with Xu Yi Jun, Harold Dean Archer v The Hong Kong Channel Ltd (unrep, 19 April 1996, HCLA12/1996) (HC) …… must be deemed overruled. ……

28.  For completeness, this conclusion is reinforced by the following:

(a)  Section 32’s overall purpose is self-evident: to ensure that (subject to strictly circumscribed prescribed exceptions) an employee will receive payments of wages and other sums due to him in full – for these essentially represent his entire livelihood – without any deductions, by any means, by his employer. This resonates with the EO’s Long Title, beginning with the words ‘To provide for the protection of the wages of employees’. The necessary consequence is that, even if the employer has a valid claim against him, the employer will have to pursue – and recover – such claim separately, without affecting in any way his payments of wages and other sums owed to him.

(b)  Thus, in Tyrrell Benjamin John v Writer Relocasia Ltd (unrep, HCLA 14/2013, 19 November 2013) (CFI) ……, where the claimant employee’s claims were for arrear of wages, expenses and annual leave pay, and the defendant corporate employer alleged (inter alia) that the claimant employee’s misappropriation of the defendant’s fund and the reckless claims on reimbursement expenses (and putting up defamatory statement against the defendant) gave the defendant the right to withhold the claimant’s salary, this Court (L Chan J) agreed that EO ‘section 32… would not have allowed the deduction of wages on account of these allegations. There is therefore no point in transferring these claims to the CFI or to adjourn them until after the mediation of HCA 2366 of 2012’ (a High Court Action where the defendant effectively counterclaimed against the claimant in relation to these and other similar allegations) (§25).

(c)  This case is a fortiori Williams: there, the employer had already obtained an order from a court of summary jurisdiction against the employee on the cross-claim; here, the Counterclaim is not even adjudicated yet.”

52.  Discretion to or not to transfer  Section 10 of the LTO provides as follows:

“(1)  The tribunal may, at any stage of proceedings, if it is of the opinion that for any reason the claim should not be heard and determined by it, decline jurisdiction.

(2)  The tribunal may, when it declines jurisdiction under subsection (1), transfer the claim to the …… [DCt] …… in such manner as may be prescribed.”

53.  The Tribunal has a wide and unfettered discretion under section 10 of the LTO. In Archambaud v Sino Communication Holding Ltd, where the employee (a) commenced proceedings in the High Court against the employer who filed a defence and (b) then commenced proceedings in the Tribunal for 6 months’ salary in lieu of notice, arrears of salary, agreed commission, “double pay” and reimbursement of expenses, all of which (except the claim for “double pay”) were included in the High Court proceedings which in turn sought some additional relief not claimed in the Tribunal, Fuad J noted section 10 of the LTO does not provide any guidelines whatever as to the circumstances in which the Tribunal may properly decline jurisdiction and having done so, transfer the claim to the High Court or DCt, so “[clearly] then, a wide and unfettered discretion is given” to the Tribunal.[19]

54.  It has been said that a good reason for making an order for transfer could well be lack of jurisdiction or a doubt as to jurisdiction (page 343), and that even though the avoidance of unnecessary proceedings is a cardinal principle in all litigation it has to be balanced against the exclusive jurisdiction given to the Tribunal (page 344). In that case, the employer wanted to have all claims dealt with in the High Court, and although the employee also asked the Tribunal to transfer the case to the High Court, he had a change of heart and requested for the claim to proceed before the Tribunal. Nevertheless, he took no steps to discontinue the duplicated claims in the High Court. In such circumstances, the learned judge considered the proceedings before the Tribunal ought to be transferred to the High Court (pages 343-344).

55.  Mr Hughes submitted that transfer of proceedings from the Tribunal to the CFI or the DCt can be made at any time which includes in the midst of a part-heard trial. But in my view, the fact that proceedings in respect of claims in the Tribunal that are within its exclusive jurisdiction have proceeded to trial must be a relevant consideration in the exercise of the discretion under section 10 of the LTO.

56.  Mr Hughes referred me to Harold Dean Archer v The Hong Kong Channel Ltd[20] where the claimant appealed against the decision by the Tribunal to transfer the proceedings before it to the High Court:

“3.  The reason for declining jurisdiction, as set out by the learned presiding officer in his reasons, was that the nature of the defence and the legal issues involved rendered the matter inappropriate for a resolution in the [Tribunal]; and more appropriate to be dealt with in the High Court.

4.  The appellant’s claim is, of course, a straightforward claim for arrears of salary, bonus and other matters. It is the defence raised by the respondent that gave rise to the order for transfer. The defence raised by the respondent is that the appellant was guilty of breaches of duty as managing director of the company, that he had been guilty of wrongful manipulation of his said position as managing director for personal and private gains against the interest of the company.

5.  All these allegations go direct to the amount of the claim made by the claimant. It was alleged by the respondent that the allowances and bonuses were not authorised. It is the respondent’s contention that the defence and the allegations they entailed require investigation of the company accounts as well as other company documents, including the auditors’ report, the annual report and the board minutes. The defence raises legal issues which are by no means simple according to the respondent.

6.  It is admitted that the nature of the dispute in the defence involved serious allegations and will not be appropriate subject matters for an informal summary form of adjudication. The allegations raised in the defence go direct to the appellant’s reputation and it is his reputation that is at stake there.

The [Tribunal] is designed for speedy resolution of labour disputes of a nature that formal court procedures are not necessary. It is in the light of this that a discretion has been given by the legislature to the presiding officers in an appropriate case that would require a more formal and proper investigation of complicated matters, that he can transfer the case to other more appropriate jurisdiction.

7.  In the premises, the [Tribunal] is not designed to cater for disputes that would require a detailed analysis of voluminous and complicated documentation, or that would involve complex issues of facts or law …… the matter is indeed of a complicated and complex nature ……

……

9.  There is in law, no need for the learned presiding officer to conduct a full-scale investigation of the nature suggested by the appellant in deciding the issue at hand.

10.  I am satisfied that there is sufficient prima facie material before the learned presiding officer for him to come to the conclusion that there is a bona fide defence and/or …… counterclaim; as well as a set off as alleged by the respondent. It is only encumbered upon the respondent to raise a bona fide defence to entitle him to request the Court to transfer the matter to the High Court. …….

11.  I cannot find fault at all with the way the learned presiding officer exercised his discretion. I endorse his view that the defence is of such a nature that required proceedings in the High Court. It is impossible for the claim to be severed from the defence and/or counter-claim, as the defence raised goes direct to the claim of the appellant in that the defence is one of a set-off, and counterclaim against the appellant’s claim. It is the defence and/or counter-claim that the amount claimed arose out of the alleged breach of duty of the appellant, that the amount claimed are unauthorised remuneration’s arising out of a breach of duty of the appellant as the managing director.

12. Therefore, there is no alternative but to transfer the whole action to the High Court. ……” (my emphasis)

57.  However, insofar as Harold Dean Archer suggested the employer’s claims/allegations that the employee was “guilty of breaches of duty as managing director of the company, that he had been guilty of wrongful manipulation of his said position as managing director for personal and private gains against the interest of the company” raised a defence that went to the amount of and could not be severed from the employee’s claim for “arrears of salary, bonus and other matters”, ie the “the defence is one of set-off, and counter-claim against the [employee’s] claim”, this must be viewed with caution and is likely to have been overruled in light of the decision of the Court of Appeal in Xu Yi Jun v GF Capital (Hong Kong) Ltd[21] discussed in paragraph 51 above.

58.  But Jerome Chan J’s guidance in Harold Dean Archer is still of relevance in that (a) there is in law no need for the Tribunal to conduct a full-scale investigation to determine whether or not to transfer proceedings to another court venue, and (b) the Tribunal has to satisfied there is sufficient prima facie material to come to the conclusion that the claim and defence in the proceedings before it are deserving of transfer to another court venue.

59.  In Fan Kin Nang v Proview International Holdings Ltd,[22] the employer appealed against the Tribunal’s refusal to transfer the employee’s claim to the DCt. In fact, the employer had already brought proceedings in the DCt claiming for return of confidential information and injunction against the employee from taking them away, and the employee counterclaimed for the employer’s breach of implied obligations under the employment contract in relation to damages for wrongful dismissal.

60.  Waung J found the 2 grounds relied on for saying the Tribunal erred in not transferring the case before it to the DCt, ie (a) there was intimate connection between the 2 sets of proceedings and such duplicity should cause the Tribunal to make the order of transfer, and (b) “the dispute in the [Tribunal] over the question of summary dismissal was of a sufficiently complex nature that it ought to be transferred, to be dealt with by the [DCt] together with the other complex issues already in the [DCt]”, of substance (paragraph 6). He went on to say as follows:

“8.  The whole coherent story of what really happened in October had to be examined and it seems to me that it would be unfortunate if only claim B in the [Tribunal] that is the summary dismissal aspect was examined or was narrowly focused. I think there is too much of overlapping in the overall story for it to be narrowly isolated to only the consideration of claim B by the [Tribunal]. The general law about the undesirability of concurrent proceedings or duplicity of issues and the risk of inconsistent findings is well-known. It seems to me that the [Tribunal] had not given sufficient weight to the considerable overlap of the two sets of proceedings.

9.  Turning to the second ground of appeal of complexity, it seems to me that it is quite clear that this is not the ordinary sort of case that the [Tribunal] deals with.  It is perhaps not even the ordinary sort of case that the [DCt] generally deals with.  It is really a case much more suitable for the High Court.  …… it seems to me, the complexity of these two sets of proceedings really calls for the [Tribunal] proceedings to be immediately transferred to the [DCt].”

61.  In Hofmann Klaus Wolfgang v Asia Today Limited,[23] the Tribunal transferred to the CFI the employee’s claims for damages, contractual bonus, contractual severance payment and wages in lieu of notice as a result of alleged wrongful termination without notice (paragraph 15). The employer’s defence was that termination without notice was justified due to the employer’s wilful disobedience of lawful and reasonable orders, misconduct which was inconsistent with the due and faithful discharge of his duties, fraud and dishonesty against the employer, breach of loyalty to the employer, and acts against the employer’s interests (paragraph 16). The employer then issued proceedings in the CFI for (a) damages for breach of contract, statutory and/or fiduciary duties, tortious duties and/or trust duties in his capacity as an employee/director of the employer, (b) a declaration that the employer was entitled to and did summarily dismiss the employee, and (c) a wide range of reliefs against the employee for inter alia an account of profit and injunctive relief (paragraph 17). As there was no stay of the transfer order, so by the time the application for leave to appeal against the transfer order was heard, the employee’s claim had been transferred to the CFI, he had engaged solicitors to act for him, and the court had granted directions for filing of pleadings.

62.  B Chu J held that a key issue in relation to the employee’s claim before the Tribunal was whether the employer had a good cause of action to terminate the employee’s employment (paragraph 37). The learned judge found the case before her not dissimilar to Harold Dean Archer, and concluded that:

“46.  The Presiding Officer was entitled to form the view that the complicated factual disputes would require a more formal and proper investigation with discovery of voluminous evidence, and it was inappropriate for those serious allegations to be tried summarily in the Tribunal.

47.  Further, as the Presiding Officer had pointed out, it is quite clear that [the employer] will not be able to raise its claims or to seek some of those reliefs as set out in the SOC as a set-off or counterclaim before the Tribunal and is obliged to pursue the matter in the High Court Action.

48.  The Presiding Officer has stated in paragraphs 30 and 31 of the Reasons, if [the employee’s] claim in the Tribunal is not transferred to the High Court, there will be two sets or proceedings carrying on in parallel trying on issues that are in common and that this is a very undesirable situation, and further that the possibility of having two sets of trials for determining disputed facts and legal issues arising from the same set of factual evidence in two jurisdictions should not be allowed to occur so as to avoid the risk of having two inconsistent judgments.

49.  I agree with the Presiding Officer’s above views. ……”

63.  By now, in considering the impact of 2 sets of proceedings in the Tribunal and in the CFI/DCt, the aforesaid cases have to be read in light of the guidance by the Court of Appeal in Xu Yi Jun. Further, there can be no dispute that a decision as to whether to transfer or to decline transfer proceedings under section 10 of LTO is a case management decision. I agree with Mr Wong that an appellate court will be slow to interfere in a lower court’s case management decision. It was held by the Court of Appeal in Mimi Kar Kee Wong Hung v Severn Villa Ltd & ors as follows,[24] which principles are also relevant to appeal against case management decision of the Tribunal:[25]

“31.  It must also be borne in mind that the orders made by the Judge in the intended appeal are case management decisions in the exercise of the discretion of the trial judge. Case management decisions are only subject to appeal in rare circumstances. The appellant faces a ‘very high hurdle’ and must show that the judge ‘has gone clearly wrong and made orders which will clearly involve an injustice or an inability for the trial court to carry out its task’, or if the judge ‘erred in principle or the order was irrational having regard to the issues that had to be resolved’. It need hardly be emphasised that generally, an appellate court will not interfere with a judge’s exercise of discretion unless the judge has misunderstood the law or the evidence or the exercise of his discretion was plainly wrong such that it was outside the generous ambit within which a reasonable disagreement is possible.”

VIII.  SOLE GROUND OF APPEAL

64.  In light of the legal principles discussed in paragraph 51 above, particularly noting the guidance from the Court of Appeal in Xu Yi Jun, Mr Hughes at the Hearing conceded that by reason of section 32(1) of the EO (subject to exceptions[26] which are not pertinent to the present Appeal) an employee’s claim for wages and other sums due to him is prohibited from being set-off by his employer’s counterclaim.

65.  I note the claim in Xu Yi Jun concerned guaranteed bonus under the employment contract, which was similar to Cs’ liquidated wages claims in LBTC1664/2018, so section 32(1) of the EO covered Cs’ claims for both arrears of wages and end of year payments, and thus prohibited Ds from exercising any set-off against any liability to pay Cs their arrears of wages and end of year payments by reason of D1’s Counterclaim. In the circumstances, Mr Hughes at the Hearing initially conceded that even if Cs’ claims were to be transferred to the DCt, such claims would merely constitute another civil action in the DCt separate and distinct from DCCJ2090/2019.

66.  Later at the Hearing, Mr Hughes further conceded for the purpose of the Appeal that Ds would no longer rely on Grounds 1-3 and 5, which grounds were premised on the existence of an arguable defence of equitable set-off. Thus, the remaining ground Ds relied on for the Appeal was Ground 4 (which encompassed Sub-4a and Sub-4b).

67.  Mr Hughes submitted Ground 4 would support the Appeal in that Cs’ claims themselves involved (a) legal and factual issues in dispute that were of such complexity and gravity and (b) allegations that were so serious that Cs’ claims ought to be transferred to the DCt, and the DPO erred in failing to give due regard/weight to such matters when she granted the Refusal Order (see paragraph 43 above).

68.  But in my view and as rightly pointed out by Mr Wong, this was not a correct reading of Ground 4 (see paragraph 43 above). Whilst it was true that Ground 4 referred to complex legal and factual issues in dispute and grave allegations, the focus of this ground of appeal was not about Cs’ claims on stand-alone basis, but it was about Cs’ claims when considered in light of the alleged defence of set-off (now abandoned) as raised by D1’ Counterclaim.

69.  In my view, this reading was quite evident from the contents of Ground 4 as set out in paragraph 40(d)(i)-(ii) above. The particulars given in Ground 4 were that even though the DPO allowed the parties to rely on all the documents they had submitted[27] for the trial, she (a) indicated to the parties not to spend extensive time on matters outside the jurisdiction of the Tribunal (which in my view was to urge the parties to focus on Cs’ claims) and (b) gave directions for the parties to submit further evidence and to call additional evidence in relation to Cs’ claims, so Ds complained that the DPO by doing so “discounted their [ie the evidence’s] complexity and gravity by viewing them through the prism of [Cs’] claims without taking into account [Ds’] defence of set-off” (my emphasis). Thus, the gist of Ground 4 was not about the DPO’s failure to recognise the complexity and gravity of the issues in dispute in relation to Cs’ claims on stand-alone basis, but about the failure to recognise the complexity and gravity of the issues in dispute and the gravity of the allegations raised in Cs’ claims when viewed from the perspective of D1’s Counterclaim.

70.  In fact, such reading of Ground 4 was borne out by Mr Hughes’ own written submissions as follows, which plainly showed Ground 4 was also premised on Ds’ alleged defence of set-off that rested on D1’s Counterclaim:

“53.  As to ground 4 (complexity and gravity), the Parties have filed voluminous documents in the Tribunal Proceedings in support of their respective claims, including Ds’ breach of fiduciary duty and other claims raised both by way of setoff and counterclaim. The causes of action (in respect of both the set-off and counterclaim) as discussed in detail in §§46-57 of the Reasons include tort, breach of trust, breach of fiduciary duties, and restitution/unjust enrichment. The Parties accuse each other of professional impropriety, dishonesty and perjury likely to damage their reputations. It is submitted that the claims are unsuitable for informal and speedy determination, and representation and adversarial process is in the Parties’ best interests.

……..

56.  It is submitted that, in allowing the filing of the Dec Documents, the 3^rd Supp Statement and the Jan Documents, all of which addressed the Counterclaim, and in making subsequent case management decisions seeking to limit this evidence solely to Cs’ claims, the DPO erred in choosing to disregard their complexity and gravity whilst at the same time failing to view these documents from the perspective of D’s defence of set-off. Having found, correctly, that Ds were raising their claims which fall outside the jurisdiction of the Tribunal as both shield and sword, and in light of the complexity and gravity of those issues (and the supporting evidence), the DPO ought to have appreciated the further injustice in not allowing the Transfer Application in order to ensure the proper determination of all the pertinent issues in the Parties’ respective claims.” (my emphasis)

71.  In light of Ds’ concessions noted in paragraphs 65-66 above, I cannot see how Ds could pursue Ground 4 as a viable ground of appeal. More importantly, section 32(1)(a) of the LTO made clear that any appeal against the Refusal Order could only be brought on a point of law as allowed by the CFI, and this court by the Leave Order has not granted leave for Ds to appeal against the Refusal Order on the basis that Cs’ claims on stand-alone basis (ie putting aside any alleged defence of set-off and/or D1’s Counterclaim) raised issues/allegations of such gravity and complexity that Cs’ claims should be transferred to the DCt as separate civil action distinct from D1’s Counterclaim (now effectively pursued as DCCJ2090/2019) (“Alleged Ground”).

72.  In light of my conclusion in the above paragraph and Ds’ abandonment of Grounds 1-3 and 5, the Appeal must be dismissed. However, in defence to counsel’s arguments canvassed at the Hearing, I proceed to consider the Alleged Ground on the assumption (which I disagree) that leave had been granted for Ds to appeal on such ground. On the Alleged Ground, it was plain Ds were attacking what was plainly a case management decision by the DPO, and the Appeal must be viewed through the legal principles for challenging against such exercise of discretion as explained in paragraph 63 above.

IX.  ALLEGED GROUND

73.  Mr Hughes submitted it was clear from the authorities that the Tribunal was not suited to deal with cases that involved complex issues of fact and law. He reiterated Jerome Chan J’s views in Harold Dean Archer (see paragraph 56 above), and noted the ground of complaint against the Tribunal’s refusal to transfer to the DCt in Fan Kin Nang in paragraph 60(b) above showed it was not an ordinary sort of case dealt with by the Tribunal which therefore called for its immediate transfer from the Tribunal to the DCt (paragraph 9). Mr Hughes also referred to Hofmann Klaus Wolfgang in which B Chu J noted that the Tribunal declined jurisdiction and transferred the case to the High Court because inter alia (a) the employee’s claim involved complicated factual disputes which required a more formal and proper investigation and (b) the parties had retained their own lawyers for preparation of the Tribunal proceedings from the outset and in the subsequent High Court action, which suggested both parties all along realised there were complicated legal/factual issues in their disputes that required legal assistance to resolve, so it could not be said that the claim would have been dealt with more quickly and more cost effectively in the Tribunal than in the High Court (paragraph 23(ii)-(iii)). In Vermeerbergen Peter Alfred, in the 1^st trial of the employee’s claim for commission before the Tribunal the claimant was criticised for being speculative and unable to produce evidence to support his claim, but all relevant documents of sales were in the possession of the defendant and were not disclosed, so Wilson Chan J found that the re-trial before another presiding officer (after a successful appeal against the award made after the 1^st trial) cried out loud for full and extensive discovery, and hence the case should be transferred to the High Court (paragraph 17).

74.  Mr Wong had no quarrel with the above authorities, but argued that each case would turn on its facts as to whether there were any issues and/or allegations of such complexity or gravity that would justify transfer to the DCt or the CFI.

75.  Turning first to the matter of legal representation, Mr Hughes submitted that, similar to the parties in Hofmann Klaus Wolfgang, both Cs and Ds were legally represented all along, which in turn suggested that Cs’ claims and Ds’ defence thereto were complex and should be resolved in the DCt rather than in the Tribunal. I have no doubt Ds’ present solicitors were all along advising and assisting Ds in relation to the proceedings in LBTC1664/2018. As for Cs, Mr Hughes referred to Ds’ 3/8/18 Letter that stated they “understand that [Cs] are legally represented by Li & Partners, whose correspondence they have produced in evidence in [LBTC1664/2018]” (see paragraph 12 above). Mr Hughes then referred me to a letter dated 4 May 2018 that D2’s solicitors wrote to C2’s solicitors demanding C2 to cease and desist from interfering with the operation of D2’s bank account (see paragraph 24 of the Defence).

76.  But Mr Wong submitted that apart from instructing solicitors to respond to the letter by D2’s solicitors in May 2018, Cs handled the proceedings in LBTC1664/2018 themselves. Mr Wong reminded that (a) Cs engaged Lu & Partners LLP to represent them in DCCJ2090/2019 (which commenced on 26 April 2019, ie after the Refusal Order) and (b) Lu & Partners LLP filed Notice to Act on behalf of Cs in the present proceedings on 5 November 2019 (ie after the Leave Order). Indeed, the DPO noted in paragraph 8 of the Reasons that “[whilst] both parties instructed lawyers to communicate on their behalf before Cs instituted the present proceeding ……, Cs confirmed they no longer engaged any legal representative …… after they commenced their claims at the [Tribunal] while Ds continued to engage Messrs Tanner de Witt …… as their legal advisor”.

77.  I disagree that Cs’ arrangements for legal representation as explained in the above paragraph would indicate they viewed their claims in the Tribunal as complex and/or deserving of formal/proper investigation in the DCt. Rather, their arrangements showed they perceived they could deal with their claims in the Tribunal on their own, but they considered the matters raised by D1’s Counterclaim (now effectively pursued in DCCJ2090/2019 in the DCt) and by Ds’ Appeal justified legal representation on their behalf.

78.  Mr Hughes next submitted that Ds claimed C1 and C2 respectively signed multiple employment contracts without Ds’ consent and authority,[28] and it was disagreed that C2 had not been paid by D2 and that C2 was entitled to payment by D2 for arrears of wages and end of year payments from 1 August 2015 to 31 May 2018,[29] which raised complex issues of fact and law. Although Cs asserted their claims were straightforward ones that concerned employment status and outstanding compensation, Mr Hughes argued there were complex contractual issues arising out of Cs’ employment status vis-à-vis D1 and D2 as well as allegations of false documents, dishonesty and lies by Ds.[30]

79.  Mr Hughes also reminded this court Ds complained of the need for further discovery on the basis that Cs failed to return all D1’s company properties and documents in their possession and control,[31] particularly bank documents pertinent to Cs’ claims for arrears of wages and end of year payments.

80.  Before I deal with Mr Hughes’ arguments in paragraphs 78-79 above, I find it useful to see how the DPO viewed the nature of Cs’ claims and Ds’ defence thereto:

“23.  Cs’ Head [A] wages arrears claim. On the 1^st and 2^nd day of the trial, this Tribunal and the parties had gone through the statements filed by Ds on 7 December 2017 and 22 January 2018 respectively. Accordingly, the dispute in relation to the employment period of Cs with D1 and/or D2 has been narrowed down.

24.  For C1, Ds’ latest case is that she was no longer under the employ of D1 for the period January to July 2018 (i.e. 7 months out of 11 months claimed by C1), essentially on the basis that C1 has tendered resignation in about January 2018 and that she had since then started working for Datacrag Limited, a company which appears to be controlled by [F Gamper] [D-b; D-c]. For C2, D1 and/or D2 challenged C2 was not employed by them for the period July to September 2016 (3 months out of 35 months of the period as claimed by C2). In other words, insofar as Cs’ claim period is concerned, there is no dispute C1 was under the employ of D1 for the period 1/9/2017 to 31/12/2017; whereas C2 was employed by D1 and/or D2 for the periods 1/9/2015-30/6/2016 and 1/10/2016-31/7/2018.

25.  For this head of claim, as stated in their statements, Ds’ case is that they have already settled Cs’ wages [D-q(2)]. Relying on certain bank statements [D-s(1)-(63); D-t(1)-(144)], for instance, it is their saying that the sums that Cs received in July were actually part or whole of Cs’ July salary settled by D1 and/or D2, so on and so forth [D-ae(1)-(2)].

26.  In the light of the parties’ respective case, the issues for Cs’ Head [A] claim can be broadly categorized into:

(1)  For the disputed period, whether Cs were employed by D1 and/or D2 as alleged?

(2)  In any event, what is the amount of wages arrears, if any?

27.  Cs’ Head [B] End of year payment claim. For this head of claim, Cs rely on clause 2(i) of the C1 and C2’s Contracts as well as clause 2(i) of C2’s contract with D2 dated 12 February 2007 (‘C2’s First Contract’) [C1-2(1-5); C2-2(1)-(5); and C2-7(1-5)]. Whilst Ds during the trial confirmed they would not dispute the quantum of this head of claim, they asserted that Cs are not entitled to this item on the basis that C1 and C2’s Contracts were not valid for they were not signed by [M Gamper], nor had the Board approved C1 and C2’s Contracts in accordance with D1’s Articles of Association.

28.  Cs disagreed with Ds’ contentions and submitted C1 and C2’s Contracts have been duly approved and asserted no employment contracts of Ds’ staff were ever supported by board resolutions. They referred to other employment contracts of Ds, including those of [M Gamper] and [F Gamper] as support [c-o(1); c-b(12-17)]. For C1, she further alleged she was a de facto or functional director, which, with the consent or approval of [M Gamper], she had been held out as a director of D1 to third parties [c-ct(1)-(4)]. As for C2, he alleged that since he was a director and General Manager of D1 at the relevant time, he had the authority to approve employment contracts [D-g(51)]. They further rebutted Ds’ allegation by reference to the fact C1 has been paid double pay for the periods 2013-16 while C2 had been paid his share before 2015 and [M Gamper] had never taken any issue about this before they commenced the present proceedings [e.g. D-s(45)].

29.  Accordingly, the principal broad issue for this Head [B] claim can be categorized as whether C1 and C2’s Contracts were valid.

……

31.  Accordingly, the principal broad issues that fall for the determination of this Tribunal are whether the Contracts were valid, if so, what is the amount that Cs would be entitled to.”

81.  Thus, given Ds’ clarification that C1 was employed by D1 from 1 September to 31 December 2017 and that C2 was employed by D1 and D2 from 1 September 2015 to 30 June 2016 and from 1 October 2016 to 31 July 2018 respectively, the issues in dispute in respect of Cs’ claims for arrears of wages were (a) whether Cs were employed by D1/D2 during the disputed periods and (b) whether Ds had already settled Cs’ wages, and if not, what was the amount of outstanding wages. In respect of Cs’ claims for end of year payments, Ds confirmed there was no dispute over quantum, and the only dispute was whether the employment contracts Cs relied on was invalid because (i) they were not signed by M Gamper, and (ii) D1’s board of directors had not approved such contracts in accordance with D1’s articles of association, or whether they were valid for the reasons set out in paragraph 28 of the Reasons.

82.  In my view, these were straightforward factual disputes, and I agree with the DPO that “Cs’ claims are straightforward claims based on contracts and do not involve complex issues of facts and law. The three heads of claim filed by Cs are claims that frequently seen and determined in the [Tribunal]. It is also obvious, for the matters stated above, the determination of the claims essentially involves a fact-finding exercise and application of legal principles which are well-established” (see paragraph 41 of the Reasons).

83.  For the fact-finding exercise in relation to Cs’ claims for arrears of wages, paragraph 39(i) of D1’s Counterclaim alleged that upon review of D1’s bank statements and expense reports created/filed by Cs to date, D1 believed it had paid all salaries and amounts due to Cs for their respective employment with D1, and in fact it had overpaid Cs for amounts to which they were not entitled. D1 also averred Cs arranged for payments in a total sum of $1,183,000 from D1’s bank accounts to their joint bank account, which payments appeared to be their salary payments, and D1 exhibited a schedule of such payments on item-by-item basis (see annexure C-17 of the Counterclaim). In my view, this plainly showed D1 had access to the necessary bank statements, and it was able to work out the supporting bank account entries that supported its defence.

84.  Further, in Ds’ letter to the Tribunal dated 7 September 2018 (ie even before D1’s Counterclaim filed on 7 December 2018), it was said that although Cs failed to return D1’s company properties in their power or possession, Ds had received D1’s accounting records from its former accountant, and they intended to undertake a full investigation of such accounting records to ascertain what payments had or had not been made by D1. Again, this showed D1 had access of its relevant accounting records. Mr Hughes had not been able to articulate what documents were unavailable but necessary for D1’s defence to Cs’ claims in contra-distinction to D1’s prosecution of its Counterclaim (now effectively D1’s claim in DCCJ2090/2019).

85.  As for C2’s claim against D2, paragraph 15(i) of the 3^rd Supp Stmt claimed that based on review of D2’s bank statements, Ds concluded that in the period from August 2015 to 2 March 2017 a total sum of $1,910,874.23 was paid from D2’s bank account to Cs’ joint bank account, which payments appeared to be relate to salary or bonus payments, and M Gamper exhibited a table of such payments on item-by-item basis from July 2014 to March 2017 from D2’s bank account to Cs’ joint bank account.

86.  Plainly, Ds had access to D2’s bank statements and were able to work out the items of payments that (on Ds’ case) showed D2 had paid wages to C2. Ds were unable to articulate what further discovery was required for D2’s defence to Cs’ claim in contra-distinction to D1s’ prosecution of its Counterclaim (now effectively D1’s claim in DCCJ2090/2019).

87.  Indeed, the DPO noted in paragraph 42 of the Reasons (and I agree) that “[in] particular, as stated above, Ds no longer has a discovery request for Ds’ bank statements as they had already obtained them and had utilized some of them as their defence. As such, a more formal and proper investigation and discovery which may make other courts a more proper venue is dispensed with ……”

88.  As regards the questions of whether Cs were employed by D1/D2 at certain periods of time and whether Cs’ contracts of employment were valid, I am unable to see how they could be regarded as complex matters for the Tribunal given exclusive jurisdiction and hence had experience and expertise in dealing with and determining similar claims.

89.  But Mr Hughes submitted the following facts also served to highlight the complexity and gravity of the proceedings in respect of Cs’ claims:

(a)	the parties filed voluminous documents (including the Dec Documents, the 3rd Supp Stmt and the Jan Documents filed by Ds) in LBTC1664/2018;[32]
(b)	the DPO declined jurisdiction to hear D1’s Counterclaim and accordingly requested the parties “not to spend extensive time on matters that fall outside the jurisdiction of the [Tribunal]”, but allowed the parties to file and rely upon voluminous documents they submitted (see (a) above), all of which, according to Mr Hughes, addressed D1’s Counterclaim (see paragraph 19 of the Reasons);
(c)	the DPO directed the parties to submit further evidence and call additional witnesses in respect of Cs’ claims (see paragraphs 22 and 41 of the Reasons);
(d)	the DPO considered having an accountant attend before her both (i) as witness to confirm what amounts had been received and (ii) as expert with duties to the Tribunal, to assist her with the banking documentation.[33]

90.  Before I deal with Mr Hughes’ arguments in the above paragraph, I turn to see how the DPO dealt with such contentions:

“41.  …… As a matter of fact, for the fact-finding exercise, for Head [A] [ie Cs’ claim for arrears of wages], in view of Ds’ recent allegations as set out in the Dec and Jan Documents, this Tribunal has already directed parties to submit further evidence to verify the purposes of the payments as summarized on D-ae(1)-(2) and parties have also undertaken they would do so. Ultimately, it boils down to whose version is to be accepted on balance based on all available evidence.

42.  This Tribunal also considers the case would be dealt with more time and cost effectively in the [Tribunal] than in the [DCt] for the reasons stated herein. …… Moreover, if the whole case is transferred, it is inevitable parties would have to start over from the pleading stage. Bear in mind the matters aforesaid, and that the case was started in June 2018 whereas on the other hand, it appears the CC claims [Counterclaim] basically are premised on assertions and bank statements which [M Gamper] has or had no direct knowledge of the contents therein [D-q(2)&(6)] (e.g. in the [3^rd Supp Stmt], when elaborating on a review of D1 and D2’s bank statements, [M Gamper] accepts the bank statements by themselves cannot identify the purpose of the payments), accordingly, for all the reasons stated above and below, this Tribunal is of the view that a transfer order to the [DCt] will cause unnecessary delay to the determination of the issues of the case. It will also likely and unnecessarily escalate the costs to be incurred by the parties as parties might not be able to deal with the case in the [DCt] personally whilst Cs’ claims, which falls within the jurisdiction of the [Tribunal], can be dealt with at the [Tribunal] at no legal costs.”

91.  In my view, in respect of Cs’ claims in contra-distinction to D1’s Counterclaim, Ds could not be heard to complain about the matters in paragraph 89(a)-(d) above when it was Ds who filed the Dec Documents, 3^rd Supp Stmt and Jan Documents at a late stage, and when the DPO exercised her case management discretion to indulge Ds by allowing in those documents with the admonition not to spend extensive time on matters that fell outside the Tribunal’s jurisdiction. As it turned out, they were words of wisdom since (a) D1 eventually chose to effectively pursue its Counterclaim in DCCJ2090/2019 in the DCt,[34] and (b) no defence of set-off premised on such Counterclaim was permitted against Cs’ claims. In light of (b) above, quite irrespective of any transfer of Cs’ claims, time should not be spent on matters concerning D1’s Counterclaim and/or the purported defence of set-off for the purpose of pursuit/defence of Cs’ claims. But to effectively proceed with the scheduled trial of Cs’ claims, and in light of the lateness of the 3^rd Supp Stmt and the Jan Documents, the DPO fairly allowed Cs/Ds to submit Cs’s and Ds’ Further Evidence that concerned Cs’ claim. In my view, such case management efforts by the DPO to make trial before her effective by granting indulgence to Ds despite the lateness of their evidence and by helping the parties to focus on issues raised by Cs’ claims were quite unassailable, and could not in any way be said to be wrong as a matter of law.

92.  I am also not persuaded that Cs’ claims would require assistance by expert forensic accounting evidence. Indeed, I agree with Mr Wong that on proper reading of the transcript of the trial proceedings in LBTC1664/2018 on 29 January 2019, the DPO did not appear to suggest any such expert evidence:

“COURT: And, in fact, actually has any party attempted to engage the accountant to be witness in this case? He can confirm the HK A/P files he received. That would be easier.

……

2^ND CLAIMANT: I did not ask because we don’t want to over-complicate the case but we can if we are allowed …

……

2^ND CLAIMANT: … to do so tomorrow.

COURT: ……you know this is – these are the new assertions.

……

COURT: He says those figures represent the salary for that particular month but, of course, it depends on whether the court accepts that salary will be payable – was paid in advance. Do you understand what I mean? Because, normally, doesn’t make sense.

2^ND CLAIMANT: Yes, but …

COURT: Anyway, …

2^ND CLAIMANT: … the defendant had access to all the financial records and the accountant did not find any …

……

COURT: 2^nd Claimant, so what? Why don’t I get an …… independent person who owes a duty to the court, not to the parties? I can decide whether or not to accept his evidence. I just need him to confirm, if possible, one thing: whether or not he had, at the relevant time, received the A/P files, Hong Kong A/P files. But, of course, if the emails can show me those files have been copied to him, that may save the necessity of engaging him.

So, C1, you may have to consider, other than printing out the A/P files, print out the relevant emails; right? Okay? I suppose that you should have copy every single file to the accountant; is it?

A: Yes.

……” (my emphasis)

93.  The above extract was taken from the cross-examination of C1, and the reference to the Hong Kong A/P files was a reference to the account payable files that C1 shared with and sent to the accountant every month.[35] Thus, the “accountant” whom the DPO referred to was not a forensic expert but the contract accountant who was expected to be non-partisan and who could confirm or not confirm C1’s assertion, ie that C1 had sent to him and he had received from C1 the Hong Kong A/P files. The Hong Kong A/P files related to the issue of whether certain accounting entries were or were not salary payments, so the matter of the “accountant” was to clarify a factual point. This was addressed in Cs’ Further Evidence (see paragraph 27 above, which included the witness statement of D1’s contract accountant Winnie Yan). In my view, this did not raise any issue of complexity or gravity.

94.  Having carefully considered the DPO’s grounds for declining to transfer Cs’ claims set out in paragraphs 41-42 of the Reasons (see paragraph 90 above), I find they were relevant and meritorious factors that ought to have been taken into account in deciding whether or not to decline transfer of Cs’ claims to the DCt. Another pertinent consideration was the fact that the trial of Cs’ claims before the DPO was part-heard, and to transfer Cs’ claims to the DCt would undo the part-heard trial with some evidence already taken from C1. In a case which was not so complex as Mr Hughes would have me accept, it would cause delay and add to costs if the Refusal Order were to be set aside and Cs’ claims transferred to the DCt for the trial to be heard anew.

95.  Mr Wong also sought to fortify support for the Refusal Order that separated adjudication of Cs’ claims from adjudication of D1’s Counterclaim by his submissions that on proper analysis the entirety of D1’s Counterclaim (now effectively pursued by D1 in DCCJ2090/2019 commenced after the Refusal Order) fell outside the Tribunal’s jurisdiction, so there was no overlapping issue with Cs’ claims.

96.  In this respect, Mr Wong argued that the heads of D1’s Counterclaim for inter alia unapproved expenses payments, over-reimbursements and excess payments were essentially for recovery of monies allegedly converted/misappropriated by Cs who were said to have wrongfully used/retained the same. I agree such claims were mixed claims founded both in tort (ie conversion by misappropriation[36]) and in contract (ie breach of employment contract), and consequently would have been excluded from the Tribunal (see paragraphs 48-50 above), so the DPO came to the correct conclusion in this respect in paragraph 60 of the Reasons. I also agree that D1 by its Counterclaim also sought reliefs for monetary payment and injunctive order in respect of which the Tribunal has no jurisdiction (see paragraphs 21 and 35-38 of Woo Kwok Ping). In my view, Ds must have recognised this because right after the Refusal Order D1 commenced DCCJ2090/2019 in the DCt that was, practically speaking, D1’s Counterclaim. As Mr Wong submitted, if Ds thought otherwise, DCCJ 2090/2019 would have constituted an abuse of process for the DCt would have no jurisdiction over any claim falling within the Tribunal’s jurisdiction.

97.  Further, Mr Wong argued there did not appear to any overlapping issues or, at the very least, material overlapping issues between Cs’ claims and D1’s Counterclaim (now effectively D1’s claims in DCCJ2090/2019). He suggested that in the absence of the defence of set-off, which Mr Hughes abandoned at the Hearing, the DPO’s views in the paragraph 64 of the Reasons were of merit (see paragraph 33 above). Thus, it was said there was no need for this court to substitute its own conclusion for the above views of the DPO on the basis that the DPO’s evaluation could not be said to be, as Mr Wong put it, one which could not be reasonably entertained.[37] On such analysis, Mr Wong argued there was little basis to say there would real risk of inconsistent decisions were Cs’ claims to remain in the Tribunal and D1’s Counterclaim (now effectively D1’s claims in DCCJ 2090/2019) was to proceed in the DCt, so there was no need/reason for Cs’ claims and D1’s Counterclaim to be adjudicated by the same forum.

98.  Turning to Ds’ stance in this respect, although at the Hearing they abandoned Ground 2 as a ground of appeal, Mr Hughes still relied on paragraphs 49-50 of his written submissions that concerned Ground 2. It was said that in declining to transfer Cs’ claims to the DCt, there was real risk of inconsistent findings in light of the matters pleaded in Ds’ defence to Cs’ claims which overlapped with matters pleaded for D1’s Counterclaim (now effectively pursued in DCCJ2090/2019), so the DPO must have erred in failing to take into account such matters when coming to her decision that risk of inconsistent findings was “relatively low”.[38]

99.  But I cannot see how such arguments could be supported when (a) Ds conceded no defence of set-off premised on D1’s Counterclaim could be raised against Cs’ claims in the Tribunal, and (b) even if Cs’ claims in the Tribunal were to transferred to the DCt they would have to constitute fresh civil proceedings separate and distinct from DCCJ2090/2019 (which was effectively D1’s Counterclaim). Thus, the risk of inconsistent findings (if there were such risk) would remain even if Cs’ claims were transferred to the DCt.

100.  Mr Hughes in his written submissions on Ground 2 further suggested paragraph 65 of the Reasons (see paragraph 33 above) provided further strong grounds in support of the transfer of Cs’ claims to the DCt. Again, I am unable to see the vitality of such arguments even though Ds did commence DCCJ2090/2019 (which by now was effectively D1’s Counterclaim) in the DCt. All that was said in paragraph 65 of the Reasons (see paragraph 33 above) was that D1’s claims in DCCJ2090/2019 would not prevent Cs and Ds jointly agreeing to transfer the entire case in the Tribunal (including Cs’ claims) to the DCt, but this was subject to 2 caveats: (a) such proposition contemplated a joint application “if [Cs and Ds] consider appropriate”, and (b) such joint application was still “subject to court’s approval”. There was no suggestion Cs would be agreeable to transfer of their claims in the Tribunal to the DCt (given their present stance at the Appeal suggested otherwise), and/or the Tribunal would approve any proposed transfer (given the DPO’s analysis in the Reasons).

101.  In further answer to Mr Wong’s contentions in paragraph 97 above, even though Ds abandoned reliance on Ground 1 for the purpose of the Appeal, Mr Hughes still relied on paragraphs 57-62 of his written submissions that pertained to such ground of appeal. Such ground of appeal focused on the common issues of fact between Cs’ claim and D1’s Counterclaim. It was said that the Tribunal’s findings[39] would embarrass or prejudice the DCt when it came to determine what bank transfers amounted to wrongful payments. Mr Hughes explained that the common primary evidence was Ds’ banking and accounting records, and not only Ds claimed only some of them had been recovered, C1 conceded not all salary payments were marked with “SAL” and some salary payments were made for amounts due for earlier periods.

102.  I have explained in paragraph 99 above why, if there were any overlapping issues and hence risk of inconsistent findings, such risk could not have been avoided by transfer of Cs’ claims in the Tribunal to the DCt. Further, even though some evidence might be common to both Cs’ claims and D1’s Counterclaim (now effectively D1’s claims in DCCJ2090/2019), I agree with Mr Wong there were no materially overlapping issues, which would largely reduce any risk of inconsistent findings.

103.  Although Ds alleged that only some of the records had been recovered and that substantive analysis of payments from Ds’ accounts were required, I am not persuaded these would be matters of complexity. Not only did Ds have access to its banking records (see paragraphs 83 and 85-87 above) and accounting records (see paragraph 84 above), they also prepared schedules of item-by-item bank entries to support their case of over-payment to Cs which would, according to Ds, defeat or extinguish their claims. In any event, if there was any concern over the fullness of the banking records in Ds’ hands, I cannot see why Ds could not have asked their bankers to reproduce a full set of their banking records for the past several years. Further, if there was any concern over accounting records that D1 confirmed it had already received from the accountant, Cs had now produced the accounts payable files and further witness evidence from the contract accountant by way of Cs’ Further Evidence, and Ds had responded thereto by Ds’ Further Evidence. The issues raised by Cs’ claims had narrowed rather than expanded. In fact, as Mr Hughes noted in paragraph 62 of his written submissions, the DPO had carefully went through the documents submitted to the Tribunal to distil matters relevant for Cs’ claims, and to separate those relating to D1’s Counterclaim (see paragraph 19 of the Reasons - see paragraph 25 above). In my view, to transfer Cs’ claims to the DCt would put asunder the useful work already done by the Tribunal to date.

104.  Further, as Mr Wong submitted, the fact both Cs and Ds might in due course rely on some evidence (eg Ds’ banking and accounting records) common to both Cs’ claims and D1’s Counterclaim (now effectively D1’s claims in DCCJ2090/2019) of itself would not suffice to justify an order for transfer. I draw analogy from the following observations in Hong Kong Civil Procedure 2021 in the context of consolidation of actions:[40]

“…… the court has an unfettered discretion in deciding whether to order consolidation of actions. There is no hard and fast rule that just because the parties are identical and some common question of fact or law is involved in both actions, it would be expedient and proper to order consolidation …… It is a balancing exercise and each case has to be assessed on its own facts. Consolidation is a matter of convenience and economy in case management ……

As a general principle, the Court will take a practical and common sense approach to meet the justice of the situation, apart from saving costs and time, bearing in mind the underlying objectives under O.1A, always recognizing that the primary aim in exercising the powers of the Court is to secure the just resolution of disputes in accordance with the substantive rights of the parties ……

…… this is a matter of case management rather than principles of law.  In making case management decisions, the Court is primarily concerned with savings of time and costs and also with the avoidance of unnecessary delay, complexity, overloading of issues and experts and witnesses repeating their evidence ……”

105.  In the first place, as the Counterclaim (now DCCJ2090/2019) was brought by D1 only, so not all of Ds’ banking and accounting records pertinent for Cs’ claims would be relevant for D1’s Counterclaim. In any event, the factual overlap between Ds’ defence (ie that Cs had been paid) against Cs’ claims for arrears of wages[41] and D1’s Counterclaim for unauthorised or misappropriated payments and over-payments[42] did not appear significant. Still further, as a matter of case management, if there was any true concern over overlapping duplicity and inconsistent decisions, Cs or D1 could apply to the DCt in DCCJ2090/2019 (which merely reached the stage of close of pleadings) to stay such proceedings pending the Tribunal’s determination of Cs’ claims.

106.  For all of the above reasons, I do not see any viable point of law for this Court to interfere with the DPO’s exercise of discretion to grant the Refusal Order. I am unable to say that the Refusal Order was plainly wrong or wrong in principle, and/or that it had resulted in injustice. On the contrary, with the alleged defence of set-off out of the way (which meant Mr Hughes’ concerns about compartmentalising the same causes of action relied upon both in Ds’ defence to Cs’ claims in the Tribunal and in D1’s claims in its Counterclaim now effectively pursued in the DCt fell away), I find the DPO’s decision well supported by the reasons she gave in the Reasons, and the Refusal Order that separated adjudication of Cs’ claims from adjudication of D1’s Counterclaim was in principle correct. Cs’ claims, which I do not find to be complex but which fell within the Tribunal’s exclusive jurisdiction, had been part-heard, and there was no justifiable reason not to continue with the trial of Cs’ claims in the Tribunal whilst D1’s Counterclaim was to be pursued in the DCt as DCCJ2090/2019.

X.  LITIGATION TACTIC?

107.  In light of the above conclusion, it would be unnecessary for me to consider Mr Wong’s submissions that D1’s Counterclaim represented Ds’ unacceptable ligation tactic to create avoidable delay and prejudice to Cs’ detriment, which he claimed must be stopped by dismissing the Appeal. Mr Wong referred to the occasions since 20 July 2018 in which Ds threatened to raise a counterclaim and to seek to transfer to the DCt on such basis (see Parts I and II above), but Ds only filed D1’s Counterclaim about 5 months later on 7 December 2018 (ie long after Ds confirmed to the Tribunal on 10 September 2018 that they need not file further statements and the Tribunal thereby set down Cs’ claims for trial in January 2019). Mr Wong complained that despite the lateness of D1’s Counterclaim, Ds not only failed to give particulars of the sums claimed that would correlate to the Dec Documents, but on 22 January 2019 (ie 3 days before the scheduled trial) submitted the 3^rd Supp Stmt (that purported to add a “counterclaim” by D2) together with the Jan Documents. Mr Wong argued that the procedural history set out in Parts I and II above (of which D1’s Counterclaim was part) revealed chronic unacceptable delaying tactics and procedural manoeuvres on Ds’ part, and that acceding to Ds’ request to transfer Cs’ claims to the DCt would only exacerbate the delay and cause further prejudice to Cs who were entitled to expeditious adjudication of their claims.

108.  Mr Wong drew my attention to (a) section 16 of the LTO which provides that every presiding officer, including the DPO, “shall ensure that there is no avoidable delay in the determination of a claim and shall have regard to any proceedings in any other court which may result in judgments to the prejudice of the claimant”, (b) the informality of the Tribunal’s procedures such that strict rules of evidence do not apply ( see sections 20(1) and 27(2) of the LTO), and (c) the observations of DHCJ Lam (as he then was) in蕭冠鋒訴順成建築工程有限公司 as follows:[43]

“22. …… I have to take into account that the [Tribunal] has been established with the aim of enabling workers to seek recovery from their employers by means of a simple but fair and expeditious litigation mechanism. For this reason, s 16 of the [LTO] provides that a presiding officer shall ensure that there is no avoidable delay in the determination of a claim. Section 20(1) further provides that the hearing of a claim shall be conducted in an informal manner, and s.27(2) provides that the rules of evidence shall not apply to proceedings in the Tribunal, which may receive any evidence which it considers relevant. Section 22 requires a presiding officer to deliver his determination of a claim as soon as possible after the conclusion of the hearing of the claim.”

In my view, the DPO in allowing the parties to file all documents they submitted and (upon considering the late Jan Documents) in allowing the parties opportunity to submit further evidence and to call additional witnesses relating to Cs’ claims[44] was understandable case management that avoided delay, but at the same time enabled the parties’ substantive claims and defence to be effectively tried. It lied ill in Ds’ mouths to complain as this state of affairs was brought about by their late submission of the 3^rd Supp Stmt and the Jan Documents only 3 days before the scheduled trial, which but for the DPO’s sensible case management in line with section 16 of the LTO would have been derailed. Pursuant the DPO’s directions, the parties did file Cs’ and Ds’ Further Evidence, but the trial before the DPO had yet to resume and the DPO had yet to make any factual finding.

109.  Although I need not deal with Cs’ allegation as to what Mr Wong described as Ds’ unacceptable litigation tactics, I see can the force of such contention. But in fairness to Ds, even though Mr Wong complained that by now it was almost 2½ years since LBTC1664/2018 was commenced, I am not persuaded all such delay could be laid at Ds’ door. Public health considerations had significantly delayed the hearing of the Appeal (see paragraph 42 above). Nevertheless, for all of the above reasons, the DPO could not be faulted for granting the Refusal Order that promoted expeditious adjudication of Cs’ claims (which I do not find to be as factually or legally complex as Mr Hughes would have this court believe) by the Tribunal, leaving D1 to pursue its Counterclaim in DCCJ2090/2019 in the DCt.

XI.  CONCLUSION

110.  Since the Refusal Order was not wrong on point of law and/or (as a matter of case management discretion) it was not plainly wrong, erroneous in principle or irrational, the Appeal must be dismissed, and I so dismiss the Appeal.

111.  There is no reason why costs should not follow event. I grant a costs order nisi that Ds shall pay Cs costs of and occasioned by the Appeal to be taxed if not agreed.